Why we love to lose on Lotto

A friend of mine describes Lotto as a "tax on people who can't do maths".

My friend is right in the sense that the odds of winning anything worthwhile via Lotto are horribly stacked against the players. Check out the exact odds in this official brochure  published by the New Zealand Lotteries Commission with the hilarious title of 'Have Fun and Play Responsibly'.

In another sense, though, I reckon most players have an intuitive grasp of the mathematical possibilities presented by their own income - ie they will never achieve the life of moneyed luxury portrayed in the Lotto ads by their own efforts.
As author Peter Howland puts it in this interesting essay exploring the Lotto phenomenon: "Many of us now believe that the gap between our present circumstances and future prosperity will not necessarily be achieved by sober, hard grind but rather will be made in a single lucky leap."

In this context, what's 10 bucks a week? (It's $520 per year, which compounded over time could grow to... you know the story.)

Lotto cynics are also facing a tough marketing battle. It's winners that make the news, not the millions of losers. The latest lucky face of Lotto fits the mould perfectly. As interviewed on TV3 the shaggy, affable, unemployed Peter Green is visible evidence that anybody's luck can turn.

Green is remarkably unambitious for his money, with reports that he would be happy enough to live on $307 per week interest from his $500,000 and never work again - which is exactly what real retirement is like for many people (minus the $500,000 capital).

Until the long-term savings industry can compete with stories like Green's, regular Lotto players are unlikely to divert their weekly punt to more sensible, money-making alternatives.

Even the global financial crisis hasn't dampened the risk-taking, pioneer spirit. According the the New Zealand Lotteries Commission latest half-yearly report , sales in the last six months of 2008 were up almost 19% (or just over $70.3 million) compared to the same period in 2007.

Across all its various gambling ventures, the Commission raked in $442.3 million in the six months to December 31, 2008, with the suckers (sorry, "customers") egged on during the build up to its biggest jackpot of all time, eventually won in October.

As the report boasts: "The excitement of the largest-ever $30 million Powerball jackpot grabbed the attention of the whole country. In the final stages of the jackpot run, demand for tickets led to long queues at retail stores and resulted in NZ Lotteries' best-ever sales week."

How's the NZ Lotteries Commission going to top that in 2009? Imagine the pressure in the boardroom.

A thorough reading of the Commission's report should convince numerate Lotto players to give up. But if you still want to participate in the thrill generated by watching numbered balls picked out of a barrel, this is a solution suggested on a website link picked out by me randomly.

"Here is a better way to play the lottery, write down 5 numbers between 1 and 49, then pick a Powerball number between 1 and 42 (you can reuse any of the previous 5 or pick another number). Don't buy a ticket, then when the drawing is held, and your numbers don't match, you can congratulate yourself for saving a dollar."

I don't see it catching on.

David Chaplin

Picture: Andrew Spence from Andrew Spence Pharmacy in Napier. Photo/Hawkes Bay Today